Budget 2013 Sees Tax Administrative Function Entirely Outsourced to Taxpayer

When the income tax was first introduced in South Africa in 1912, taxes were paid once a year and the government sent its tax agents around with a hat in hand to collect taxes from the public.

The government has systematically changed the way it collects taxes and shifted the burden onto companies and individuals with the withholding tax, where tax is taken straight off employees’ salaries, while taxes are now also paid on a monthly basis, not annually as in the good old days (to mention two major changes). Also note the supposed free marketeer Milton Friedman came up with the withholding tax.

Accounting and consulting firm Moore Stephens noted in a newsletter this morning that with Budget 2013 and the introduction of the new Tax Administration Act, “in effect, SARS have transferred the total tax administration function from themselves to the taxpayer and tax practitioner…The same principles apply to new tax registrations, especially VAT and Employer tax registrations.”

So the cost of collecting taxes are being shifted onto the taxpayer. Thus, SARS is cutting its costs, but shifting those costs to the taxpayer. Indirectly it means taxes are going up. The taxpayer will have to employ “tax specialists” in the private sector to comply with the increasingly complex tax laws. Don’t expect tax specialists to complain about this, it’s great for business. But what it means for the economy is that more people will be employed in helping the private sector comply with tax laws. That’s not productive job growth, the economy will become less productive and poorer as a result.

It’s just another way government is making the rest of us its slave.